Development report cites China as growth model

By Don Weinland 

Tuesday, 08 May 2012 

Phnom Penh Post

Workers oversee the construction of a Chinese-funded bridge over the Tonle Sap river in Phnom Penh earlier this year. Photograph: Hong Menea/Phnom Penh Post

It's been done numerous times, comparing the “China miracle” to its emerging and frontier neighbours as a benchmark for development.

Cambodia might seem an ill-fitted student of the world’s second-biggest economy.

But a recent report from the Cambodia Development Resource Institute pointed to some lessons the Kingdom should heed.

The CDRI report, released yesterday, looked to China’s model for developing industry, agriculture and alleviating poverty, as well as how the strategy could apply to Cambodia.

“China’s development experiences and reform are ones that Cambodia can further examine as heavy involvement of the Chinese government in the development process has contributed to its impressive growth for the last three decades,” the report said.

The two countries – their budgets, demographics, markets – are fundamentally different, and it could be difficult to apply China’s growth lessons in Cambodia, Chheng Kimlong, a business and economics lecturer at the University of Cambodia, said.

But the manner in which the Chinese government has supported select sectors has been an important part of the country’s development strategy, he said.

“One of the things that China is depending on is the advancement of technology. And the Chinese government has led the way,” he said. “In Cambodia, this is one thing I don’t see much. Supporting technology is something the government should do more of.”

The CDRI report pointed to the low average number of people working in research and development in the Kingdom between 2000 and 2008.

Cambodia had just 17 R&D researchers per 1 million people, while China had 1,071.

China spent about 1.44 per cent of gross domestic product per year on research and development, while Cambodia spent only 0.05 per cent.

It’s these kinds of investments that have helped push China’s GDP growth, Chheng Kimlong said.

The Cambodian government should take the lead in sectors such as technology, agricultural processing and food processing, he said.

The dominance of state-owned enterprises in China, which account for a large percentage of the country’s GDP, was a less enviable trait.

Although the leadership from the Cambodian government was welcomed in many fledgling sectors, SOEs should not dominate the market, Chheng Kimlong said.

Industry aside, about 80 per cent of the Cambodian population lives in the countryside.

About 30 per cent of Cambodians were below the poverty line in 2007, down 20 per cent from a decade earlier, the CDRI report said.

Averaging 10 per cent growth in GDP for several years, people living in poverty in China dropped from about 60 per cent since the late 1970s to about 7 per cent in 2007, according to the report.

Removing constraints such as low productivity and poor infrastructure from the Cambodian agriculture sector could help to alleviate poverty in the same area where reform began in China nearly 30 years earlier, the report said.

“There are some lessons from the China experience here. The first is not to ignore rural and agricultural development in its development strategy,” Jay Menon, lead economist at Asian Development Bank’s office of regional economic integration, said in an email yesterday.

Diversification in crops and more value-added processing worked well for China, and held similar potential for Cambodia, he said.

China’s investments in education have also been successful, and similar treatment in Cambodia should be “addressed urgently”, Menon said.

Improvement in secondary education would position Cambodia to inherit some of the low- and semi-skilled jobs that are exiting China as wage pressures rise, he added.

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To contact the reporter on this story: Don Weinland at don.weinland@phnompenhpost.com